Over the last few weeks, there has been a buildup in the news in regards to the Greek debt issue and how it will affect the world. Many were expecting and actually saw an 11th hour agreement between the European Union (EU) and the Greeks, but the Greek government, who negotiated for the deal, are now campaigning against the agreement and have placed the agreement to a referendum. It is not expected that the Greeks won’t be able to make a €1.5 billion to the International Monetary Fund (IMF).
Various measures are now in effect in Greece. Sadly, none of the measure looks at the root cause of government mismanagement. Citizens are limited to withdrawing €60 per day from bank machines while government continues to NOT collect from tax payers. 
Pensioners are not allowed to withdraw their pensions from the banks, but yet inefficient government programs and services continue to operate.
Many of the issues around the Greek debt crisis actually go back to when Greece entered into the European Union. In 1999, the Greek government budget deficit was above the 3% threshold set by the European Union. Furthermore, the economic numbers presented by the Greeks were not considered to be highly reliable, but yet, were not questions by the markets.
The economic crisis of 2010 was the first blow delivered to the Greek economy but it has gotten worse. The economy of Greece has seen a 25% decrease in GDP. The Greek have always been against austerity measures that other countries have adopted and now growing and stable because of them. By 2014, the Greek economy was starting to see moderate growth but it was not enough to help decrease the level of unemployment in the country.
Many people have been asking: why should I care about Greece, they are on the other side of the world? Well, there are 4 different ways that Greece can affect a Canadian:
- Investments: Investment markets don’t like instability. There is also fear that this could be the first domino to fall. I like to see it as a buying opportunity.
- Food: Feta and olives are imported into Canada. It is hard for manufacturers to sustain operations without a financial system to back them up. How would they be able to accept payment from Canada without a bank involved?
- Currency: If you are planning to travel to Greece in the near future, get your currency (in small denominations) before you get to Greece. Currently, banks are closed and you can only get €60 per day.
- Interest Rates in Canada: The world economies are all intertwined. The activities in Greece may aid in keeping interest rates in Canada low since the Bank of Canada competes with other countries for the flow of capital.
What steps do you think that Greece should take? Should they go down the austerity root? Are the golden pensions and unpaid taxes of the middle class safe? Will the Greeks be forced out of the EU? Time will tell. The referendum is scheduled for Sunday, July 5th.
Have an awesome week.
Kevin MacDonald is a Business Consultant at L6S Business Consulting Inc (www.L6SBC.ca). L6S offers services in management consulting, Controller and CFO contracting, and lean management with either project work or teaching/mentoring of staff. Kevin has his CMA accounting designation along with a Black Belt in Lean Six Sigma.
Kevin is active in the community by volunteering for different groups and donates platelets at the Canadian Blood Services clinic on a bi-weekly basis.
L6S Business Consulting will also be holding 3 sessions in regards to social media (Twitter, Facebook, and LinkedIn). For more information, please email: info@L6SBC.ca